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The Sydney Morning Herald

CBA to step up cross-selling with insurance push

Author: Anthony Hughes
Date: 13/09/2002
Words: 456
          Publication: Sydney Morning Herald
Section: Business
Page: 20
Commonwealth Bank of Australia plans a concerted push into the general insurance market as its seeks to draw a more significant contribution from the smallest and most volatile earner in the group its insurance division.

Peter Beck, managing director of CBA's life and general insurance division, CommInsure, said yesterday the group planned to double market share in home and contents policies, a market dominated by the likes of NRMA Insurance, to 10 per cent in the next three years.

While the division might look at acquisitions, growth would primarily come from organic opportunities such as selling more policies to customers who take out mortgages with CBA.

Mr Beck said the bank might even look at controversial classes of insurance such as public liability, one of the least profitable for insurance companies, if the market was reformed and was attractive.

At present, the cross-sell ratio for home and contents policies was about 40 per cent but he said the bank could do much more to encourage its lending staff to sell insurance products to customers. ``We have basically got access to 10 million customers and our mission is to cross-sell insurance to those 10 million customers," he said.

Some branches for instance cross-sold insurance to 80 per cent of customers but the experience was variable and others sold none.

Mr Beck said it was also the objective of the bank to become No1 in life insurance in Australia. It is now second, behind AXA Asia Pacific.

CBA generates about $450 million in life insurance premiums, mainly from businesses inherited from the Colonial acquisition, about $150 million in home and contents premiums and a similar amount in car insurance through rebadged policies underwritten by Allianz.

But the business's success has been overshadowed by weak results from the Asian life insurance division, where CBA has resisted calls for it to be sold, and the success of the bank's fund management division, Colonial First State.

``The nature of our business is that people tend to think it's volatile but with life insurance the more people we cover the less volatile it is," Mr Beck said.

Legacy system issues associated with Colonial's previous life acquisitions of Legal & General and Prudential had been of concern to the market immediately after the purchase of Colonial but he said IT issues had been resolved.

CBA could also better exploit opportunities to sell life products through its tied financial planners and was planning to launch a new income protection product that would offer discounts on certain claims criteria. The bank is expected next year to phase out the Colonial name for its life insurance products and replace it with the CommInsure name.

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